Outrage Over Wall St. Pay, but Shrugs for Silicon Valley?

Big paydays on Wall Street often come under laserlike scrutiny, while Silicon Valley gets a pass on its own compensation excesses. Why the double standard?

Take Eric Schmidt, the former chief executive and current chairman of Google. Google’s compensation committee last month awarded Mr. Schmidt $100 million in restricted stock plus $6 million in cash. The stock vests in four years and comes on the heels of a $100 million award made in 2011.

When asked for comment, a representative of Google directed me to the regulatory filing Google made disclosing Mr. Schmidt’s compensation award. The filing states the award was paid “in recognition of his contributions to Google’s performance in fiscal year 2013.” How about that for detail?

Mr. Schmidt already owns shares worth billions of dollars in Google, and has a net worth of more than $8 billion, according to Forbes. So the latest award amount is just a few ducats to him.

As chairman, Mr. Schmidt does make a substantial contribution to Google, including helping the company negotiate a settlement with the European Union in an antitrust case. But his pay is extraordinarily high for a chairman. The typical director at a Standard & Poor’s 500 company was paid $251,000 in 2012, according to Bloomberg News. Mr. Schmidt is above that range by over $100 million.

Still, the pay award was greeted with few questions and apparently no criticism from Google’s shareholders or others. Compare this with the continued outcry over Wall Street executive pay.

The latest was the criticism of Jamie Dimon’s pay for 2013, given the many regulatory travails of his bank, JPMorgan Chase. The bank’s board awarded Mr. Dimon $20 million in pay for 2013, $18.5 million of which was in restricted stock that vests over three years.

In doing so, the JPMorgan board stated that the award was justified because of JPMorgan’s “sustained long-term performance; gains in market share and customer satisfaction; and the regulatory issues the company has faced and the steps the company has taken to resolve those issues.”

While JPMorgan may be hogging the regulatory limelight at the moment, other Wall Street banks have faced that glare and have been questioned about their chief executives’ compensation. Total pay for Lloyd Blankfein of Goldman Sachs, no stranger to regulatory scrutiny, has not yet been disclosed, but he was recently awarded $14 million in stock. Once his cash bonus is announced, Mr. Blankfein will probably be paid an amount similar to Mr. Dimon’s.

Like JPMorgan’s board, Goldman’s board has sought to justify such pay and is criticized just the same.

This double standard for finance and technology doesn’t make sense.

For one, the outsize pay for Mr. Schmidt doesn’t square with Google’s performance. Putting aside the fact that he is not even the chief executive, Google had net income of $12.9 billion last year. JPMorgan was higher at $17.9 billion after adjustments for significant events and at $23.3 billion before, well, those regulatory problems. Goldman was lower than Google, but not 20 percent — it had $8 billion in net earnings.

Google’s share price has performed better than JPMorgan’s, but it is not the best-performing stock for 2013.

On pure economics, Mr. Schmidt appears to be receiving an inordinate amount. By every measure, JPMorgan is bigger, with more profits. And yet Google awards $100 million to its chairman and there is nary a peep.

The pay of Mr. Dimon and Mr. Blankfein, however, is seen as symptomatic of what’s wrong with Wall Street.

If Mr. Schmidt’s role in spearheading negotiations with regulators is an argument for his rich pay, then why doesn’t a similar role hold true for Mr. Dimon? Moreover, all of Google’s regulatory issues came on Mr. Schmidt’s watch, while some of JPMorgan’s predated Mr. Dimon and were legacy issues inherited when the bank acquired Bear Stearns and Washington Mutual.

The divergent public views on pay are particularly odd, since today’s excesses are more often in Silicon Valley. When the sequel to the movie “Wall Street” was filmed a few years ago, it was in Eric Schmidt’s apartment, not at a Wall Street executive’s. Mr. Schmidt, by the way, was reported by Business Insider to have a “fabulous life” with a Gulfstream V, a 195-foot yacht and multiple homes across the country including a new $22 million Hollywood mansion. You could write similar things about Google’s co-founders.

Imagine if Mr. Dimon or Mr. Blankfein lived so ostentatiously? Wall Street is certainly known for its high-end consumption, but it is also a place where being conspicuous about it is frowned upon. In Silicon Valley, however, the superwealthy can flaunt their toys and no one says a word.

To be sure, there is a backlash against the money and power of Silicon Valley, with street protests over the presence of too many technology workers in San Francisco.

At the same, however, there hasn’t been the volume of outrage about Silicon Valley’s executive compensation practices that there has been about Wall Street pay. Even as Oracle shareholders voted against it, the board still paid the chief executive, Lawrence J. Ellison, $78.4 million in the 2013 fiscal year, despite protest.

And Mr. Ellison’s not the only one: Apple’s chief executive, Tim Cook, got a pay package of $378 million in 2011 (albeit $4.3 million in 2012), and Marissa Mayer was awarded an initial pay package with a worth up to $129 million.

Moreover, Silicon Valley companies are more dismissive of shareholder interests than financial or other companies are, preferring to have dual-class shares that insulate the founders from interference by shareholders. Google itself is about to go ahead with a plan to issue no-vote stock to preserve power with its founders.

The likely reason Silicon Valley gets away with this is that the leaders of Silicon Valley are seen as makers and the leaders of Wall Street are viewed as takers. “The Wolf of Wall Street” is a supposed morality tale about Wall Street greed. Never mind that the film was about a Long Island brokerage firm and not Wall Street. For Silicon Valley, we get the more positive “The Social Network,” even though it celebrates the same greed and even some of the same excesses.

Wall Street bashing ignores the fact that it is finance that produces the money for tech start-ups. Finance may not be the sexy part of life, but it is integral to success, as much as good roads or telecommunications. And yes, finance has had its problems — but so does Silicon Valley.

Even if you don’t agree, perhaps it is time to call a truce on the Wall Street bias in looking at executive compensation. Instead, across the board, there should be more sober judgments about whether this is simply too much pay.

A version of this article appears in print on 02/19/2014, on page B9 of the NewYork edition with the headline: Outrage Over Wall St. Pay, but Shrugs for Silicon Valley?.